Dollar falls, but notches weekly rise post-Fed

Traders waver on Fed’s hawkishness

An earlier version of this story gave an incorrect figure for the percentage weekly decline in the euro. The story has been corrected.

NEW YORK (MarketWatch) — The U.S. dollar edged lower against the Japanese yen and euro Friday, but notched a weekly gain as traders continued to focus on a Federal Reserve meeting that left markets anticipating earlier policy rate hikes than initially expected.

Against the yen
USDJPY, -0.20%
the dollar slipped to ¥102.15 from ¥102.39 late Thursday, but gained 0.9% this week.

The euro
EURUSD, +0.4665%
rose to $1.3796, from $1.3781 Thursday. Nonetheless, it fell 0.9% on the week.

The ICE dollar index
DXY, -0.30%
which measures the greenback against a collection of its rivals, was down at 80.089, versus 80.187 in the prior session. The WSJ Dollar index
BUXX, -0.15%
another gauge of the U.S. currency’s strength, was down at 73.56, compared with 73.67 on Thursday.

In a press conference afterward, Chairwoman Janet Yellen added that rate hikes could come roughly six months after the central bank finishes winding down its bond-buying stimulus program, which is expected to be completed before the year’s end.

Search continues for Malaysia Airlines plane

(0:53)

Air searches scouring 1,500 miles off the coast of Australia have not found any objects in the southern Indian Ocean, Malaysian defense minister minister Hishammuddin Hussein said at a news conference Friday on the missing plane in Sepang, Malaysia. Photo: Getty Images

“We think [Yellen] will back away from that notion and as a result the dollar could give back some gains, but I think it would be a slow grind,” said Chris Tevere, a senior currency strategist at Forex.com. However, he added that most of Friday’s dollar movement was attributable to “profit taking after a relatively strong week on the back of the Fed decision.”

Markets looked to the Fed speakers for insight into whether the initial hawkish interpretation of Yellen’s rate-hike comments was in fact what the central bank intended to communicate.

Minneapolis Fed President Narayana Kocherlakota, who was the lone dissenter to the Fed’s rate-hike language shift, explained that he disagreed with his colleagues in the last meeting because new guidance weakens a commitment to increasing low inflation.

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